Sunday, September 21, 2008

Another Reason Why I Don't Fly China Airlines

I have always flown Eva Air when flying to and from Taiwan. Even when it was more costly to fly Eva Air over China Airlines, I've chosen Eva Air. Even these past few years when China Airlines seemed to have cleaned up its act somewhat, and offered better/larger/roomier seats (from what I hear) compared to Eva Air, I've chosen Eva Air. Furthermore, China Airlines provides personal TVs for each seat, whereas Eva Air economy class did not.

Why? Things like, severe turbulence injuring 30 passengers (Sept. 21, 2008), and exploding jets (Aug. 20, 2007), I tend to like to avoid.

Unfortunately last year when I was in Taiwan and made a trip to Hong Kong, I had to fly China Airlines due to certain time constraints. That was probably the most scared I've ever been on an airplane. Even though there was hardly any turbulence, you just never know with China Airlines.

Take a look at this website here that has a list of all airlines and their "accident rates."

China Airlines ranked 90 out of 90- where 1 is best, 90 is worst. For some reason Eva Air is not on the list, not sure why, but Eva Air is regarded as one of the best airlines in the world in regards to safety.

From Eva Air's Wikipedia:

Internationally, EVA Air's rapid expansion and increased passenger volume was boosted by its safety record, in [stark (emphasis added)] contrast to its primary competitor, China Airlines.
Especially for those who fly between Taiwan and Seattle, is there any reason to fly China Airlines? Considering the fact that China Airlines has discontinued flights between Taiwan and Seattle, there shouldn't be any reason. Do yourself a favor and avoid CAL. Is that 2-4 inches of extra seat width worth it when you consider they have one of the worst, if not worst, safety records of all airlines?

Thursday, September 18, 2008

Market Action

The volatility was ridiculous today. S&P was down 40, then back up 60 to close up 3% or so. VIX off the charts as well, spiking into 52-wk high territories above 40. The "fear" is here. It seems that the breakdown of the SPY is failing, but that's what I said a few days ago before it dropped into the 116s. Huge news regarding shorting all over the place today, most notably the UK banning short selling of financials, which quickly prompted shorters to run for cover and marked the significant reversal today. After hours, rumors of the SEC to temporarily ban short selling (on financials only?) as well, has created a positive opening for tomorrow.

I took a significant position in SPY puts today and will likely hurt for a few days as the market responds to possible short selling rule changes. I still remain significantly bearish on the market, and there is probably temptations to get on the bull train and ride this rally for whatever it's worth. But, just as quickly as the indices reversed today, it could be just as fast and hard to reverse the other way.

I have some LDK 40 calls expiring tomorrow with a cost basis of $5. Prior to today, it looked like the best I'd be able to get was around $2, a loss of $3 per contract. But, hopefully with the gap up in the morning, I will be able to get out with even a profit! If the calls are above $5 at open, I will likely exit half the position, and set a trailing stop on the second half.

Good luck, happy tradings!

Wednesday, September 17, 2008

Toxic Milk From China, Wait Panda-Love!

A couple days late, but if you haven't heard, tainted milk powder containing melamine was exported to Taiwan from China, resulting in a few deaths and thousands sick. Furthermore, the tainted milk powder was apparently known way back in June, but was kept quiet due to the upcoming Olympics. "We don't want to mess up our coming-out party, so lets cover this up, and let it blow up in Taiwan." Although I'm not too familiar with the actual trade regulations currently in place and the actual details concerning this specific export of milk powder from the Chinese company, Sanlu, to Taiwan, I think it is safe to say that stricter oversight and regulations need to be in place regarding trade between China and Taiwan. The people of Taiwan should be calling for their government to do more than just set a temporary ban on dairy imports from China. This article states,

During the meeting, Liu also promised that the government will tighten safety inspections of all dairy products imported from China, with each shipment subject to careful scrutiny.

Is it just dairy products we need to be worried about? What about the previous toy products contaminated with lead? What's next after dairy products? The government of Taiwan needs to tighten safety inspections of all dairy products imported from China. This is even more imperative as Ma, Ying-jeou continues to relax trade with China. In a world where, God forbid, there exists a "Taiwan province, China", to me it would seem like trade regulations would completely cease to exist. No regulations and no oversight would mean any and all products made in China would easily be shipped around, including to a, "Taiwan province."

I'm almost prompted to even say, Taiwan deserves this, as the majority chose to pick the leader who will literally open up the island to China. With everything comes consequences. I've mentioned in the past, sure the opening up of trade to China may even boost Taiwan's economy for a bit (something that has yet to materialize), but at the same time, Taiwan will be more reliant on China. Thus, when China's economy busts, so will Taiwan. And in this case, when China's products bust, they'll just pass it on to Taiwan, because that's what Taiwan wanted. "We want to enjoy the economic growth that China has."

But then I take a step back and realize, no one deserves this (Except for maybe the CCP, and Hu, Jintao, and
China's foreign ministry spokesman Qin Gang, and the unscrupulous business owners who try and nickle-n-dime their way through life at the expense of other people's lives).

But hey! Look on the bright side, we're getting pandas, so all is good and well. This specific article is nice in that it touches upon the facade that China is putting up. A sort of hand-waving technique that China is so good at. If there was an Olympic sport for hand-waving, China would win, hands-down-- or is it hands up? China has a Staples Easy Button
™ with the word "Taiwan Only" on it. But don't mind that button that will unleash 1000+ missiles at Taiwan, here's some pandas. The article also mentions the history of panda giving by China, citing a "Tradition of Giving,"

Tradition of giving

— Panda diplomacy existed centuries ago, when Empress Wu Zetian (690-705) gave two to the Emperor of Japan

— In 1972 President Nixon was given a pair of pandas by Chairman Mao while visiting Beijing. Two years later Sir Edward Heath received a pair from Chairman Mao

— China offered the reunion pair to Taiwan in 2005, but the gift was refused

— In 2006 Robert Zoellick, the US Deputy Secretary of State, cuddled a five-month-old panda cub during a visit to China, which was seen widely as a signal that he wanted to improve Sino-US relations

I'd say, the pandas are more like a symbolic gesture of China telling you that you are their bitch now.

No Love for Bailout

US markets starting to look like Taiwan markets. The Dow shedding more than 700 points in the last 3 trading sessions. Apparently the bailout news is now causing more concern rather than it being an instrument to save the financial stability of the U.S. This is notable in the VIX spiking again today into the mid 30s, also known I guess as the fear factor.

Looks like some sort of bear raid, or perhaps even capitulation is happening sooner than I thought. The mini-rally I thought that would come, did not. Interestingly enough, there was a little strength in the energy sector, notably natural gas- perhaps spilling over into alt. energy with LDK relatively unchanged on a day when the indices were screaming downwards > 4%. This break below the July lows should be confirmed (or not) tomorrow. Normally I would consider one close below a support a good sign of a break below, but in this volatile market, it may be smarter to wait for the second consecutive break below to go short.

A break below 120, it looks like we're headed for SPY 109, where it found support numerous times way back in 2004. That's another good 6-7% down, and considering how well the Taiwan markets are magnifying whatever losses are happening on Wall Street in their own markets, ^TWII could easily see the 5500-5600s again for their market tomorrow, and then follow through to the 5000 level in another week if the U.S. indice breakdowns are confirmed.

Be one, or a combination of these three:

1) Short
2) Cash
3) Fetal position, sucking thumb

There is no reason at all to enter long positions right now! Use any rallies to go short or exit existing long positions. If you're thinking about going long, just think of this bear, and what he'd do to your long position.

Although I've not yet been in the markets long enough to actually experience significant capitulation happening, but from the description, it seems like we're close- volume has been double the normal these past two days, and we're heading into an exponential downward curve.

Where's The Money Coming From?

We've just bailed out another institution, AIG. 85 billion dollars. Eventually this will result in the government holding an 80% stake in AIG. Public companies becoming government companies, scary. The impact of these bailouts will be hard to see until a few more years down the road, after we're out of the recession. But, what do we know, perhaps these bailouts are actually necessary to save us, but at what cost?

Now, to the markets! I gladly took the opportunity given in this early morning's gap down to exit my puts. Not only did the SPY break the 120 intra-day, it gapped way down to open at 117. But, as the charts show, the markets closed significantly positive relative to the start of the day. The breakdown of the 120 support of the SPY failed it seems, and with this AIG news, we'll likely rally for a couple days off this apparent "double bottom" of the July low.

Will likely try to unload some of my LDK calls that will expire in 3 days and depending on how strong this rally is, maybe start building SPY puts on Friday. We're still in a bear market, any rallies are short lived and should be used as opportunities to exit long positions and stay in cash, or go short- depending on how gutsy you are.

And on a sidenote, fall quarter will be starting soon, so I will be back to being a full-time student, part-time blogger. My blogs will definitely drop off in frequency, and likely return to politics for the run-up to the November elections. Furthermore, since to me it's a lot easier to blog about politics than analyzing technical patterns and reading all the details of what actually is happening in these bailouts and coming up with a conclusion, my stock blogs will probably drop off as well. Probably just some short ones on stocks may appear, but likely for my own interest as a pseudo history-log of what my thinking was.

Monday, September 15, 2008

Testing of July Lows

LEH to file for bankruptcy, and BAC to attempt to buy MER. Right now the SPY is staging a mini-comeback but it's fading just as quickly as it started. A retest of the July lows is likely to happen tomorrow, pending no more "emergency" Fed decisions. The July lows is crucial to the nearterm movement of the market, a break below the July lows, which is also pretty much the sentimental 12000 point of the S&P500, would likely start another round of selling that has yet to be seen.

Here's todays chart fort he SPY which is still being finalized in the last 10 minutes as I write this:

Note the bearish Inverted Hammer appearing today, a reversal from the previous two up days.

Many have been calling for the non-bailout of companies like LEH, and I hope we get it. Our market will not correct if the government keeps stepping in. It only delays the inevitable to the point where the collapse will be utterly hard and fast, you won't know what hit you. As far as BAC buying out MER for the ridiculous price of $29/share, that will have a hard time getting approved by regulators, which is likely why MER's price only gapped up to $23 today, and has now faded to the low $17s. Even taking approval by regulators out of the pictures, the shareholders of BAC will likely want to reject the buyout; the ridiculous price of $29/share when MER was just trading in the low teens last week is horrendous.

Anyways, look for the test of July lows, if we break it, we're headed lower. I read this on the Yahoo! Message Boards:

The Fed is officially out of bullets.

Oh sure, they can bail out Lehman, and they can lower rates some more.

But that @#$% don't fly with wall street any down we go.

You either gotta be:

1) Short
2) In cash
3) Fetal position, sucking thumb

Pick one and act. This one is gonna get ugly!
This will necessarily affect the Taiwan markets, as they've already taken a hit since they are a day ahead of us in the U.S. As I stated last week, use any rallies to get our of your long positions or even go short. But #2 above is likely the most safest route, cash is king right now.

As always, the appearance of these alone should not indicate a reversal; the safe trade should be to wait for confirmation in the next candlestick (trading day). And the necessary disclaimer:

Disclaimer: Any stocks or equities mentioned may or may not be part of my personal holdings, and thus may affect my outlook on the mentioned stock. Any trades/investments made as a result of my comments are committed at your own risk. In short, you losing your own money is not my fault.

Saturday, September 13, 2008

Same Old, Same Old

Took a break this week, and it seems like I could start taking breaks and not miss out on anything. The Ma presidency still shaping up to be the presidency that paved the way for unification. Been hiding in a cave for 3 months and aren't up to date? Here we go!

- 'Unification' pandas coming soon to Taiwan as China's only gesture of 'goodwill'
- President Ma calls Taiwan-China relationship a 'special relationship,' furthermore, not a 'state-to-state' one
- Taiwan no longer applying for full membership to U.N., instead seeks to have 'participation' in sub-agencies, likely under a name unrelated to Taiwan or even ROC
- The so-called '1992 consensus' is back in play, reverting Taiwan back to the times of 一個中國, 沒有台灣
- Plans to scrap visas for Chinese, Macau, furthering the idea that travel between Taiwan and China is domestic

Enough of that. Besides, the real story is Chen, Shui-bian right?
- Chen, Shui-bian admits to moving campaign money out of the country
- Chen, Shui-bian removes himself from the DPP
- Chen, Shui-bian denies separate allegations of embezzlement
- Chen, Shui-bian cleared of separate defamation charges
- Chen, Shui-bian cause of all problems, including 'bad' economy of Taiwan, bad relations with U.S., increased tensions with China, drop in birth rates, increase in suicides, leading Taiwan's 'seccesionists', repeated failures to join the U.N., provoking people to kick him, and the list likely goes on... cancer, AIDS, global warming, global unrest, etc.

Ma has tossed Taiwan out the window and replaced it with an island that resembles some sort of "Taiwan"-like region, but not really named Taiwan. Meanwhile, it seems like most of the government's efforts is directed at making Chen, Shui-bian look like the scum of the earth rather than trying to figure out how to fix Taiwan's economy. It's no overnight fix, but continuing to dwell on the Chen is certainly not going to get Taiwan anywhere. Chen will be dealt with in due time/process, but do the people of Taiwan have the liberty to wait around for that to happen? I'm not one with much "governmental experience" or "executive experience" like Sarah Palin ;), but the current Taiwan administration's plan seems pretty simple; it has got one solution to all the problems that Taiwan currently faces, and a few back-up plans:

(1) Play the China card: More China, more Chinese tourists, more Chinese investments, more "China" in company names, more deregulation of laws dealing with China, etc.
(2) If (1) fails, blame Chen, Shui-bian
(3) If (2) fails, blame global economy
(4) If (3) fails, say we'll "do our best!" and "have faith in us!"
(5) If all else fails, revert to (1), rinse and repeat

Monday, September 8, 2008

TAIEX Jumps 5.6%

A pretty good day for the 'street' in Taiwan. It sure must have been nice for Ma's administration to conveniently piggy-back the FRE/FNM news with their own "vows" to help the slumping market. I hope investors don't see this as another miracle that supposedly Ma has helped conduct, rather, a small bump in what will be another leg down. Coming over the AP Wire, and I quote:

TAIPEI, Taiwan (AP) - Taiwan shares soared Monday as investors took cue from a planned government package to stimulate the sagging economy.

and then secondly, they mention the real cause:

... News of the bailout of U.S. mortgage giants Freddie Mac and Fannie Mae also boosted sentiment.

Perhaps a bounce would have been seen regardless of the FRE/FNM bailout news, but surely not worthy of a 5.6% bounce. I'm going to have to give it to Ma's administration here, they have wonderfully played the timing game; they have perfected it to the point where it might just be impossible for Ma to ever be criticized and hated as much as Chen, Shui-bian. Even as Ma walks the unification road, the country is too caught up in the Chen, Shui-bian fiasco to even notice it. [Note: No support for Chen's acts here; just pointing out the coincidental timing of everything.]

Anyways, as far as the markets go... I still believe the worse has yet to be seen, and when the bottom is in, you will know it. None of this wishy-washy, maybe yes, maybe no, maybe so of where the market standing is. Capitulation. You'll know it when you see it, and until then, well... just don't get too optimistic.

Friday, September 5, 2008

Bullish Reversal

Was chatting with my cousin during the trading hours this morning, and as we got to the market close, I was starting to notice a lot of bullish reversal candlesticks on many stocks I'm covering. Add to the fact that another bailout by the Feds (on FRE and FNM) may prop up the market for a short term bull run by "sentiments" that feel the government won't let a large player fail, and thus let the economy fail. My personal feeling? It's just delaying the inevitable... Anyways, a possible short term bull run...

Just take a look at the following charts:

Here's the chart for the Dow (DJII). Friday's candle formed a bullish hammer, indicating a reversal from the previous down days.

Now here's JASO, one of my solar holdings that I've done well on as I was able to snag this at its IPO. Here we see a piercing line pattern (not quite a bullish engulfing) for today as well.

Finally, LDK, another solar stock that I've been in and out of for some time. It's fundamentals are solid and with completion of their poly plant, it should "theoretically" start trekking back to its all time highs. But, this stock is hated by Wall Street, and they have done the best they could to keep it down for as long as they can. It's been marred by false allegations of poor accounting practices, but those were cleared long ago. Anyways, nevermind the fundamentals for now, technically we see here another bullish hammer, and almost looking like a dragonfly doji.
Glossary for those new to candlestick charting:

Dragonfly Doji: Dragonfly Doji Candlestick example image from A Doji where the open and close price are at the high of the day. Like other Doji days, this one normally appears at market turning points.

Hammer: Hammer Candlestick example image from Hammer candlesticks form when a security moves significantly lower after the open, but rallies to close well above the intraday low. The resulting candlestick looks like a square lollipop with a long stick. If this candlestick forms during an advance, then it is called a Hanging Man.

Piercing Line: Piercing Line Candlestick example image from A bullish two day reversal pattern. The first day, in a downtrend, is a long black day. The next day opens at a new low, then closes above the midpoint of the body of the first day.

Engulfing Pattern: Engulfing Pattern Candlestick example image from A reversal pattern that can be bearish or bullish, depending upon whether it appears at the end of an uptrend (bearish engulfing pattern) or a downtrend (bullish engulfing pattern). The first day is characterized by a small body, followed by a day whose body completely engulfs the previous day's body.

As always, the appearance of these alone should not indicate a reversal; the safe trade should be to wait for confirmation in the next candlestick (trading day). Beware of a "fake-out" on Monday, I usually do not like trading in the first 30 minutes of market open as the first 30 minutes tend to not be an indicator of where things are heading for the rest of the day (eg. today). So that "fake-out" may be a gap up in the opening, and fades into the afternoon; so beware of that if you are awaiting a bullish confirmation on Monday. Keep in mind Ike and Hanna are headed towards the U.S. over the weekend as well. Happy trading!

Disclaimer: Any stocks or equities mentioned may or may not be part of my personal holdings, and thus may affect my outlook on the mentioned stock. Any trades/investments made as a result of my comments are committed at your own risk. In short, you losing your own money is not my fault.

Wednesday, September 3, 2008

"633" Update, Again

A day after I asked about the actual specifics about the "633" promises, both the China Post and Taipei Times are reporting on Ma's interview with the Presidential Office of Mexico where he covers both the "633" promises, as well as the relationship between China and Taiwan.

Looks like this is what Ma is changing his promises to:

- 6% Annual GDP Growth by 2016
- $30,000 Per Capita Income by 2012 2016
- 3% Unemployment Rate by 2012 2016

“Eventually, we hope to see the economic growth rate reach 6 percent, GDP per capita achieve US$30,000 and the jobless rate drop to less than 3 percent in 2016, the final year of my second term in office,” Ma said.

Although the 6% Annual GDP growth rate is annual, Ma is trying to push it farther back by saying that he hopes to see that 6% GDP growth rate by 2016, annually. Seems to me as long as he starts hitting 6% anytime in the last couple years of his terms, they will consider that as a success. What's even better though is that Ma is quoted as saying that a 4.6% GDP growth rate for 2008 will be "not bad" considering the global economy. Now, considering the global economy started falling during Chen's last year in office, a 5.7% GDP growth rate in 2007 must be at least "ok" or "decent," if not "good." Yet, the KMT were able to paint the economy during Chen's last year as horrible, dispicable, in the poopers.

With that said, Ma is basically starting to campaign for his 2nd term, by getting it out early that those promises were not failures, but rather they will be unlikely to be obtained soon, and "they will be obtained if you give me a second term." The Taipei Times quotes him as saying,

“The election promises still stand, but it will take longer to deliver them,” he was quoted as saying in the transcript.

If only it were that easy. If the opposition continues to hit their administration about their promise of a 20,000 TAIEX, I'm sure someone will eventually come out and say, "That promise stands, although it may take until 2020 to realize that." The reality is that although we like to say we need to think of the future and create a world that is better for our children, our human nature is selfish and we would rather think about the present, and for ourselves. Therefore, Ma's promises of "633" is already a failure- no one cares about promises being made 8 years out, we want to see promises realized within the next 4 years. Perhaps if Ma, from the outset, set those goals to be obtained in two terms, it would be okay; but clearly they were set to be obtained during his first and only term that is guranteed. You might even say it was arrogant for Ma to say that he will deliver the "633" by his second term.

If Ma ever gets a 2nd term, he'll be sure to justify his "three nos" such that it only applied to his first term.


At the same time, Ma takes some shots at Taiwan's soveriengty by saying that the Taiwan and China relationship is not that of two countries, but a "special" one- whatever that means. Yes, the relationship is a special one, but it is of one between two countries. It is not a special relationship between two China's, or between China and a "renegade province."

Furthermore, a continual disappearance of the word "Taiwan" from Ma's rhetoric continues. All that is left in his vocabulary are 1992, China, ROC. Ma's view of the ROC is quite consistent with that of the old guard KMT.

From Taipei Times:

Ma said that while the ROC left China in 1949, it did not disappear from the surface of the Earth. He hoped both sides of the Strait would refrain from engaging in malicious competition on the diplomatic front.

and from China Post:

Although the Chinese communists won the war in 1949, the existence of the Republic of China on Taiwan since then is a fact that "nobody can deny," he insisted.

What is Ma saying here? One China. One China. One China. Zero Taiwan. In trying to signify that there is both, the Peoples Republic of China and the Republic of China that co-exist under a supposed "1992 consensus," Ma seemingly equates Taiwan as a whole with the ROC (KMT) that left China in 1949. At least the China Post lets it slip that the current ROC is an existence of the "ROC on Taiwan." Indicating the ROC is not of Taiwan.

Tuesday, September 2, 2008

August DPP Newsletter (English)

The August DPP Newsletter is up on the DPP's English side of the website. You can find it by going here, and clicking on "Newsletters" at the top.

Real quickly of note, the newsletter mentioned the plummeting TAIEX. It has resulted in the total value of the stock exchange to drop by 5.74 trillion Taiwan Dollars. That's a lot. Google can convert that for us, and gives us an equivalent loss of 180.6 billion USD.


Monday, September 1, 2008

"633" Pledge Update

Just wanted to see if I read the "633" pledges wrong previously; but these are the pledges I thought Ma made:

- 6% Annual GDP Growth
- $30,000 Per Capita Income by 2012 (now possibly 2016?)
- 3% Unemployment Rate by 2012

This morning, reading the article by TT on Ma's response to the protests, I noticed that the $30,000 Per Capita Income is now a pledge to be met by 2016. As this was reported by the TT, I suspect it's not some sort of conspiracy to ease up on the pledges to give Ma more leway, but according to the Government Information Office (GIO) for Taiwan (see here), and I quote:

Ma: My core campaign strategy is to focus on economic development. Siew's most important role will be to serve as the main economic strategist. We have set a goal we call "633," which stands for 6 percent economic growth each year, per capita income of US$30,000 and an unemployment rate lower than 3 percent by 2012.

Is it not reasonable to say that the two "3s" pledges are targets to be attained by 2012? I don't want to get all technical into the grammar, but with no comma between the second and third pledges, "US$30,000 and an unemployment rate lower...," it would be okay to consider that the 2012 target exists for both of them. Whereas, the 6 pledge is clear in that is is an annual promise.

Or possibly they just left that part of the pledge open-ended, and could be free to extend that goal to whatever year is necessary to save face...